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Herbalife To Respond To Ackman In January, Pershing Square Launches Site With Short Case

Hedge fund manager Bill Ackman hammered away at Herbalife in a three-hour presentation Thursday. Now the nutritional supplement maker says it will host an analyst day January 7 to address his claims.

The company says it will “respond in detail to the distorted, outdated and inaccurate information contained in Pershing Square’s presentation.”

That presentation has now made it online, with the launch of www.factsaboutherbalife.com, which the hedge fund launched Friday. The site includes a full webcast of the presentation, as well as documents and filings that Ackman and his team referenced Thursday.

Shares of Herbalife fell another 7.1% Friday morning before losses accelerated and by day’s end the stock was down 19.1% at $27.27. For the week, Herbalife lost 37.9%.

It seems likely Herbalife will find a friendlier audience among the sell-side analysts that cover the company than it would have found at Ackman’s presentation Thursday, where audible snickering peppered the event and often gave way to more boisterous laughter. (See “Ackman On Herbalife: Our Target Price Is Zero.”)

According to Thomson/FirstCall, all nine analysts that track the stock currently rate it as the equivalent of a buy or strong buy.

Canaccord Genuity analyst Scott Van Winkle defended the company in a note Thursday, calling Ackman’s argument “another round of multi-level marketing criticism from an investor.” Van Winkle acknowledges that market sentiment has turned on the company, but “given this is the same argument told before, we can look to past bear markets for direct selling” and determine the stock is attractive at 8 times forward earnings, about where Herbalife stands today.

Part of Van Winkle’s defense of Herbalife is that the business model of multi-level marketing firms has already passed muster with regulators, and that the last short-seller to aggressively target the firm, Barry Minkow, is currently in prison for securities fraud (in an unrelated case).

Ackman’s presentation noted, however, that Minkow received a $300,000 settlement from Herbalife however, in what the company said was a move aimed at avoiding the “time, expense and and distraction of protracted litigation.”

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